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NorthWestern says it will seek large natural gas increase

 


HELENA - NorthWestern Energy said Thursday it will ask the Public Service Commission to approve a 45 percent increase in natural gas rates for its customers.

The company, citing its own growing costs for securing natural gas, told the panel it will file a formal request on Monday, and wants to start collecting the increase in July.

Pat Corcoran, NorthWestern's vice president for regulatory affairs, said natural gas prices have gone up dramatically across the country, and the company needs to pass its costs on to customers.

The request comes on the heels of a 36 percent rate increase the PSC approved last December.

The commissioners didn't take any action on the presentation, but PSC Chairman Bob Rowe, D-Missoula, agreed the problems facing NorthWestern may not be totally the firm's fault.

''This is clearly a national problem, a national crisis,'' he said. ''This just isn't a Montana issue.''

Others, however, said deregulation is to blame.

Commissioner Tom Schneider, D-Helena, said the company's rate increase request is the result of NorthWestern assuming a gutted Montana Power Co. He said the company doesn't own any of its natural gas sources and must rely on the open market.

''They sold 40 percent of their supply,'' Schneider said. ''That value is now gone. The sale proceeds are gone. And the old fixed prices are gone. The entire gas and electric situation has been turned on its head in Montana. It is coming back in spades to haunt Montana's economy.''

Schneider said the only way to stop the increase is for the PSC to prove the company didn't act prudently in the way it decided to buy natural gas - something he said the commission will look for closely.

NorthWestern says the average customer bill will go up from about $62 a month to about $90 dollars a month.

Also, the company said it wants to get permission from the PSC to adjust the price it charges consumers on a month-to-month basis. Currently, the company usually applies for annual adjustments based on what it expects the natural gas market to do.

That means when gas prices steadily rise, like the past several months, the company is forced to tag customers with one big increase instead of several smaller ones.

Corcoran said the company expects to be paying about $5.30 per dekatherm for natural gas by July, up from about $2 per dekatherm last summer.

A dekatherm is the thermal equivalent of 1,000 cubic feet of natural gas. An average household using natural gas consumes about 120 dekatherms per year.

Currently, NorthWestern customers pay $6.22 per dekatherm, which includes delivery costs. That amount is expected to increase to about $9.05 per dekatherm, Corcoran said.

The company said the nationwide storage of natural gas is 40 percent lower than the historical average, and gas supplies have been decreasing. The national price increase in natural gas was compounded by the loss of some nuclear energy in the east, and turbulent world oil supplies, the company said.

''Market prices are a function of supply and demand,'' Corcoran said.

The company, he said, had a long-term contract for cheap natural gas, but it expired last year. Since, then the firm has been buying on the open market.

Corcoran said the company will be contacting customers with tips for saving energy, such as installing better insulation or furnaces.

He said he expects consumers may be upset with the increase.

''It's something we don't look forward to implementing, and I'm sure it's not something our customers look forward to receiving,'' Corcoran said.

He also said that bills will increase an extra 8 percent at the end of the year, when a rebate for the sale of the former Montana Power Co. assets is removed from customer bills.

 

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